Tokyo-based AI Medical Service Inc., which is developing endoscopic software powered by artificial intelligence, announced today that it has raised $42.9 million in a Series B round.
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Japan’s Globis Capital Partners, World Innovation Lab (WiL) out of Palo Alto and Sony Innovation Fund by IGV (Innovation Growth Ventures), and others participated in the financing. Combined with the company’s last raise of $9 million in August 2018, AI Medical Service has now brought in about $57 million in venture funding since its inception in September 2017.
In its own words, the company “develops AI technology that brings together the wisdom of Japanese endoscopic specialists and supports endoscopic examinations of gastrointestinal organs, such as the esophagus, stomach, small intestine and large intestine.” Its goal is to more quickly and efficiently diagnose gastric cancer.
Early diagnosis of gastric cancer is very difficult since the symptoms are often similar to gastritis, said Dr. Tomohiro Tada, CEO of AI Medical Services.
“As a result, the false negative rate is estimated to be 15 percent to 30 percent,” he added. “Our solution is backed up by AI-trained analyses of real-time endoscopy images to support doctors in detecting lesions that are difficult to find by the naked eye.”
The 66-person company said it plans to use the new capital to promote its clinical trials, do some hiring, and further its development pipeline, as well as invest in equipment and an overseas expansion. Like any other medical technology company, AI Medical’s end goal is to get regulatory approval and — wouldn’t this be wonderful — “to save millions of people around the world” after launching its product. Its plan as of now is to launch it in 2021.
Since the company’s initial product is focused on gastric cancer, the company plans to target other Asian nations first, such as Singapore, Thailand, and Indonesia, where it says “stomach cancer prevalence is very high, and as many as 600,000 patients are dying of it every year.”
“We are also currently looking at opportunities in the U..S and Canadian markets, where the number of Asian immigrants has increased to nearly a quarter of the total population,” Tada said.
Masa Matsumoto, general partner of WiL, said in a statement that the endoscopy field is facing many challenges including “long hours required for analysis and a shortage of human resources.”
To address that, AI Medical Service partners with about 92 medical institutions in Japan and has built up a library that includes a large number of endoscopic images and thesis data.
“I believe AI Medical Service will be one of the world-leading companies, given the high barriers to entry into the market in which there are few players,” Matsumoto said.
Gen Tsuchikawa, chief investment officer with the Sony Innovation Fund by IGV, said the fund was particularly impressed by the company’s “exceptional software engineering” and “authoritative” doctors with backgrounds in endoscopies.
“At IGV, we invest in startups in areas such as AI and robotics, who are transforming high growth industries including healthcare and medical,” he wrote via email. “We see tremendous potential in companies using AI, such as AI Medical Services, in greatly improving medical procedures and the healthcare/medical industry as a whole.”
The investment marks the third to date out of Sony’s Innovation Growth Fund, a joint fund that recently launched in partnership with Daiwa Capital Holdings. It also marks the first health/medical tech investment by IGV. Sony Innovation Fund, however, has made several investments in the health/medical tech space from its first fund including AWAKENS and Exo-Imaging in the US, along with SUSMED, Metcela, and Linc’well in Japan.
Illustration: Li-Anne Dias